Entergy also announced today a new financing plan to source from $2.5 to $3.0 billion through a combination of debt and equity linked securities. The financing plan is designed to provide adequate liquidity to Entergy and its subsidiaries while storm restoration cost recovery is pursued from a combination of insurance providers, federal and state legislation, and jurisdictional regulatory proceedings.
Utility, Parent & Other
In third quarter 2005, Utility, Parent & Other earned $285.8 million, or $1.35 per share, on an as-reported basis, compared to $257.5 million, or $1.11 per share, in third quarter 2004. Operational results in each period equaled as-reported results.
Entergy New Orleans results for the quarter are included in Utility, Parent & Other earnings. However, Entergy New Orleans was de-consolidated for third quarter 2005 financial reporting purposes due to uncertainties surrounding the nature, timing, and specifics of the Entergy New Orleans bankruptcy proceedings. On September 23, 2005, Entergy New Orleans filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code to protect its customers and ensure continued progress in restoring power and gas service to New Orleans after Hurricane Katrina.
Earnings in third quarter 2005 reflect the storms' impact which reduced overall customer usage and revenues. Third quarter results also reflect an increase in net revenue due primarily to warmer-than-normal weather resulting in higher usage in the residential, commercial, and governmental sectors and lower operation and maintenance expense due to resources normally dedicated to operation and maintenance tasks being shifted to storm restoration work. In addition, a portion of the proceeds received during third quarter 2005 from a settlement with the Central Interstate Low-Level Radioactive Waste Compact Commission were applied against operation and maintenance expense. Accretion from Entergy's share repurchase program also impacted third quarter results.
Entergy New Orleans results for third quarter 2005 contributed three cents per share, compared to six cents per share one year ago. The decrease, due to outages caused by Hurricane Katrina, reflects $15 million of lower net revenue, compared to one year ago while overall fixed costs of Entergy New Orleans remained essentially unchanged.
Excluding Entergy New Orleans, megawatt-hour sales in the residential sector in third quarter 2005, on a weather-adjusted basis, were down nearly two percent, compared to third quarter 2004. Commercial and governmental sales, after adjusting for weather, were down nearly one percent, compared to the prior quarter. Industrial sales, after adjusting for the planned loss of one customer to cogeneration, experienced a decrease of nearly three percent in third quarter 2005 compared to the same period a year ago. Weather-adjusted sales usage was lower in the current period due primarily to customer outages in all customer classes caused by two major hurricanes that made landfall in the Entergy service territory during third quarter 2005.
Entergy Nuclear
Entergy Nuclear earned $69.3 million, or 33 cents per share, on both as-reported and operational bases in third quarter 2005. This compares to as-reported and operational earnings of $63.7 million, or 28 cents per share, in third quarter 2004. In third quarter 2005 Entergy Nuclear had higher generation resulting from uprates, no planned outage time and fewer unplanned outages compared to third quarter 2004. In addition, operation and maintenance expense decreased quarter to quarter due to lower refueling outage amortization expense. Also, accretion impacted Entergy Nuclear's earnings during the current period.
Energy Commodity Services
Energy Commodity Services results in third quarter 2005 include only earnings from Entergy's non-nuclear wholesale assets business. Energy Commodity Services as-reported results in third quarter 2004 included earnings from both the non-nuclear wholesale assets business and Entergy-Koch, LP.
Energy Commodity Services reported a loss of $5.1 million, or three cents per share, in third quarter 2005, compared to a loss of 17 cents per share in third quarter 2004. As-reported results in the current period reflect the absence of any results from Entergy-Koch, LP, which incurred a loss of 19 cents per share in third quarter 2004. The trading and pipeline businesses of Entergy-Koch, LP were sold in late 2004. Operational results for Energy Commodity Services were also a loss of $5.1 million, or three cents per share, in third quarter 2005, compared to no earnings on an operational basis one year ago. The loss in the current period reflects reduced revenues and increased operational costs compared to third quarter 2004.
Outlook
As of the date of this release, Entergy continues to be unable to affirm 2005 earnings guidance. Entergy is currently focused on resolving challenges and uncertainties brought on by the hurricanes. While these activities may affect near-term financial performance, the company's long-term aspirations remain in tact. Specifically, Entergy aspires to deliver average annual earnings per share growth of 5-6 percent, to achieve a 9 percent return on invested capital, and to continue to improve the company's overall credit quality over the long term. The company's ability to achieve these aspirations over time will be based upon a combination factors which include, but are not limited to, intrinsic growth, the recovery of storm-related restoration costs, the return of customers and load to portions of the Entergy service territory, and the amount of cash that is available for capital deployment in investments, share repurchases, dividends, or debt retirement.
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 $10 billion and approximately 14,000 employees.
