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Entergy
639 Loyola Avenue
New Orleans, LA 70113
Date: | Oct. 28, 2008 | |
For Release: | Immediately | |
Contact: | Yolanda Pollard (News Media) | Michele Lopiccolo (Investor Relations) |
News
Release
Exhibit 99.2
Entergy Reports Third Quarter Earnings
New Orleans, La. - Entergy Corporation (NYSE:ETR) today reported third quarter 2008 as-reported earnings of $470.3 million, or $2.41 per share, and operational earnings of $487.3 million, or $2.50 per share, compared with as-reported and operational earnings of $461.2 million, or $2.30 per share, for third quarter 2007.
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures | ||||||
Third Quarter and Year-to-Date 2008 vs. 2007 | ||||||
(Per share in U.S. $) | ||||||
Third Quarter | Year-to-Date | |||||
2008 | 2007 | Change | 2008 | 2007 | Change | |
As-Reported Earnings | 2.41 | 2.30 | 0.11 | 5.33 | 4.63 | 0.70 |
Less Special Items | (0.09) | - | (0.09) | (0.18) | - | (0.18) |
Operational Earnings | 2.50 | 2.30 | 0.20 | 5.51 | 4.63 | 0.88 |
*GAAP refers to United States generally accepted accounting principles.
Operational Earnings Highlights for ThirdQuarter 2008
- Utility, Parent & Other earnings were moderately higher with lower income tax expense and operations and maintenance expense, largely offset by lower net revenue.
- Entergy Nuclear earnings increased as a result of higher power prices.
- Entergy's Non-Nuclear Wholesale Assets business reported lower earnings as a result of higher income tax expense.
Other Business Highlights
- Entergy was named for a third consecutive year to the exclusive Dow Jones Sustainability World Index, the only U.S. utility to be selected.
- GovernanceMetrics, an independent evaluator of corporate governance activities, assigned Entergy an overall global rating of 10.0 for best-in-class corporate governance.
- Entergy Gulf States Louisiana, L.L.C. and Entergy Louisiana, LLC received nearly $1 billion of storm financing proceeds.
- Entergy Nuclear received approval from the Nuclear Regulatory Commission for the renewal of the operating license for the James A. FitzPatrick plant, extending its license into 2034.
Entergy will host a teleconference to discuss this release at 10 a.m. CDT on Tuesday, Oct. 28, with access by telephone, 719-457-2080, confirmation code 3834525. 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 3834525. The replay will also be available on Entergy's Web site at www.entergy.com.
Utility, Parent & Other
Inthirdquarter 2008, Utility, Parent & Other had earnings of $286.0 million, or $1.47 per share, on an as-reported basis and earnings of $303.0 million, or $1.56 per share, on an operational basis, compared to $305.7 million, or $1.52 per share, in as-reported and operational earnings in third quarter 2007. Operational results for Utility, Parent & Other in third quarter 2008 reflect lower income tax expense and lower operation and maintenance expense, largely offset by lower net revenues. The lower income tax expense was due to the liquidation of a subsidiary which resulted in a tax loss on the company's investment. Lower operations and maintenance expense was the result of lower payroll-related costs and the absence of a provision recorded in 2007 related to storm-related bad debts at Entergy New Orleans, Inc. and Entergy Louisiana, LLC. Operations and maintenance expense diverted to storm restoration was offset by storm expense recorded at Entergy Arkansas, Inc. Th e decrease in net revenues reflects the effect of milder-than-normal weather which reduced both billed sales and unbilled sales during the period and reduced customer usage associated with hurricanes Gustav and Ike during the quarter.
Megawatt-hour sales in the residential sector in third quarter 2008, on a weather-adjusted basis, showed a 1.5 percent decrease compared to third quarter 2007. Commercial and governmental sales, after adjusting for weather, were relatively flat year over year. Industrial sales in the current quarter were essentially the same as one year ago.
The residential sales sector showed a decrease quarter to quarter as two major hurricanes affected Entergy's service territory within two weeks of one another. An increase in the number of customers served to partially offset the decrease in sales growth in the residential sector, as well as the commercial and governmental sectors. Sales in the industrial sector for third quarter 2008 were essentially unchanged compared to the same quarter of 2007. The effect of storm activity during the quarter, an overall sluggish economy nationally, and continued weakness in the refining segment's fundamentals weighed on the industrial sector where only chemicals and primary metals faired reasonably well due to continued export activities.
Entergy Nuclear
Entergy Nuclear earned $205.3 million, or $1.05 per share, on as-reported and operational bases in third quarter 2008, compared to $160.9 million, or 80 cents per share, for as-reported and operational earnings in third quarter 2007. Entergy Nuclear's earnings increased primarily as a result of higher power prices.
Non-Nuclear Wholesale Assets
Entergy's Non-Nuclear Wholesale Assets business had a loss of $21.0 million, or 11 cents per share, on both as-reported and operational bases in third quarter 2008 compared to a loss of $5.5 million, or 2 cents per share, on as-reported and operational bases in third quarter 2007. The increased loss reflects higher income tax expense in the current period resulting from a redemption of an investment at the non-nuclear wholesale business.
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
Progress achieved since the last quarter update includes:
- Key board and leadership positions at Enexus and EquaGen continued to be filled.
- A private letter ruling finding that the spin-off qualifies for tax-free treatment for federal income tax purposes for both Entergy and its shareholders was received from the Internal Revenue Service on Sept. 10.
- Regulatory proceedings continued to advance
- In Vermont, all scheduled procedural matters have been completed and a decision from the Vermont Public Service Board is pending.
- In New York, all scheduled procedural matters have been completed and the administrative law judges issued notification to all parties that from their review of the submissions, all issues of fact and policy material to the relief requested by petitioners have been thoroughly addressed by the parties, an adequate record for decision is available to the Commission, and no further formal proceedings are warranted.
- A second amendment to the Form 10 filing with the U.S. Securities and Exchange Commission was filed on Sept. 12.
- Syndication efforts were launched at the end of August for a $1 billion Enexus senior secured revolving credit facility, and Enexus obtained over $1 billion of commitment letters.
- Documentation for the offering of pre-spin exchangeable notes by Entergy is substantially complete and Enexus is positioned to launch an offering of its notes at the first opportunity.
The state regulatory decisions and financing are now the critical path. Entergy continues to target receiving regulatory decisions in the fourth quarter. However, due to unprecedented turmoil in the financial markets, it is uncertain whether or not financing fundamental to the spin-off transaction can be effected in the near-term. Entergy and Enexus stand ready to launch the financing when market conditions are favorable for such an issuance.
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 Oct. 28, 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 www.entergy.com/investor_relations.
-30-
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 (i) Entergy's Form 10-K for the year ended December 31, 2007, (ii) Entergy's Form 10-Q for the quarterly periods ended March 31 and June 30, 2008 and (iii) Entergy's other reports and filings made under the Securities Exchange Act of 1934, (b)the uncertainties associated with efforts to remediate the effects of Hurricanes Gustav and Ike and recovery of costs associated with restoration, and (c) the following transactional factors (in addition to others described elsewhere in this press 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 regulato ry 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 | ||||||
Third Quarter and Year-to-Date 2008 vs. 2007 | ||||||
(Per share in U.S. $) | ||||||
Third Quarter | Year-to-Date | |||||
2008 | 2007 | Change | 2008 | 2007 | Change | |
As-Reported | ||||||
Utility, Parent & Other | 1.47 | 1.52 | (0.05) | 2.56 | 2.54 | 0.02 |
Entergy Nuclear | 1.05 | 0.80 | 0.25 | 2.90 | 1.96 | 0.94 |
Non-Nuclear Wholesale Assets | (0.11) | (0.02) | (0.09) | (0.13) | 0.13 | (0.26) |
Consolidated As-Reported Earnings | 2.41 | 2.30 | 0.11 | 5.33 | 4.63 | 0.70 |
Less Special Items | ||||||
Utility, Parent & Other | (0.09) | - | (0.09) | (0.18) | - | (0.18) |
Entergy Nuclear | - | - | - | - | - | - |
Non-Nuclear Wholesale Assets | - | - | - | - | - | - |
Consolidated Special Items | (0.09) | - | (0.09) | (0.18) | - | (0.18) |
Operational | ||||||
Utility, Parent & Other | 1.56 | 1.52 | 0.04 | 2.74 | 2.54 | 0.20 |
Entergy Nuclear | 1.05 | 0.80 | 0.25 | 2.90 | 1.96 | 0.94 |
Non-Nuclear Wholesale Assets | (0.11) | (0.02) | (0.09) | (0.13) | 0.13 | (0.26) |
Consolidated Operational Earnings | 2.50 | 2.30 | 0.20 | 5.51 | 4.63 | 0.88 |
Consolidated Income Statement | |||||
Three Months Ended Sept. 30 | |||||
(in thousands) | |||||
2008 | 2007 | % Inc/(Dec) | |||
(unaudited) | |||||
Operating Revenues: | |||||
Domestic electric | $3,209,000 | $2,646,546 | 21.3 | ||
Natural gas | 41,981 | 30,154 | 39.2 | ||
Competitive businesses | 712,903 | 612,387 | 16.4 | ||
Total | 3,963,884 | 3,289,087 | 20.5 | ||
Operating Expenses: | |||||
Operation and maintenance: | |||||
Fuel, fuel-related expenses, and gas purchased for resale | 1,270,160 | 809,283 | 56.9 | ||
Purchased power | 764,122 | 520,622 | 46.8 | ||
Nuclear refueling outage expenses | 58,079 | 44,387 | 30.8 | ||
Other operation and maintenance | 636,989 | 667,376 | (4.6) | ||
Decommissioning | 47,515 | 43,597 | 9.0 | ||
Taxes other than income taxes | 140,819 | 129,123 | 9.1 | ||
Depreciation and amortization | 263,656 | 239,064 | 10.3 | ||
Other regulatory charges (credits) - - net | 30,452 | 25,303 | 20.3 | ||
Total | 3,211,792 | 2,478,755 | 29.6 | ||
Operating Income | 752,092 | 810,332 | (7.2) | ||
Other Income (Deductions): | |||||
Allowance for equity funds used during construction | 10,411 | 9,367 | 11.1 | ||
Interest and dividend income | 30,400 | 63,754 | (52.3) | ||
Equity in earnings of unconsolidated equity affiliates | 1,459 | 1,432 | 1.9 | ||
Miscellaneous - net | 5,200 | (6,103) | (185.2) | ||
Total | 47,470 | 68,450 | (30.7) | ||
Interest and Other Charges: | |||||
Interest on long-term debt | 128,746 | 133,165 | (3.3) | ||
Other interest - net | 33,229 | 52,503 | (36.7) | ||
Allowance for borrowed funds used during construction | (5,939) | (5,260) | 12.9 | ||
Preferred dividend requirements of subsidiaries and other | 4,998 | 6,375 | (21.6) | ||
Total | 161,034 | 186,783 | (13.8) | ||
Income Before Income Taxes | 638,528 | 691,999 | (7.7) | ||
Income Taxes | 168,239 | 230,840 | (27.1) | ||
Consolidated Net Income | $470,289 | $461,159 | 2.0 | ||
Earnings Per Average Common Share | |||||
Basic | $2.47 | $2.37 | 4.2 | ||
Diluted | $2.41 | $2.30 | 4.8 | ||
Average Number of Common Shares Outstanding - Basic | 190,379,009 | 194,864,359 | |||
Average Number of Common Shares Outstanding - Diluted | 194,960,830 | 200,532,942 |
Entergy Corporation | |||||
Consolidated Income Statement | |||||
Nine Months Ended Sept. 30 | |||||
(in thousands) | |||||
2008 | 2007 | % Inc/(Dec) | |||
(unaudited) | |||||
Operating Revenues: | |||||
Domestic electric | $7,779,450 | $6,952,648 | 11.9 | ||
Natural gas | 185,361 | 158,014 | 17.3 | ||
Competitive businesses | 2,128,077 | 1,641,836 | 29.6 | ||
Total | 10,092,888 | 8,752,498 | 15.3 | ||
Operating Expenses: | |||||
Operation and maintenance: | |||||
Fuel, fuel-related expenses, and gas purchased for resale | 2,537,498 | 2,192,296 | 15.7 | ||
Purchased power | 2,132,967 | 1,565,861 | 36.2 | ||
Nuclear refueling outage expenses | 165,177 | 131,977 | 25.2 | ||
Other operation and maintenance | 1,958,566 | 1,871,424 | 4.7 | ||
Decommissioning | 140,327 | 123,507 | 13.6 | ||
Taxes other than income taxes | 375,332 | 368,153 | 2.0 | ||
Depreciation and amortization | 756,617 | 710,127 | 6.5 | ||
Other regulatory charges (credits) - - net | 99,970 | 62,187 | 60.8 | ||
Total | 8,166,454 | 7,025,532 | 16.2 | ||
Operating Income | 1,926,434 | 1,726,966 | 11.6 | ||
Other Income (Deductions): | |||||
Allowance for equity funds used during construction | 28,782 | 34,084 | (15.6) | ||
Interest and dividend income | 108,080 | 174,811 | (38.2) | ||
Equity in earnings of unconsolidated equity affiliates | (2,042) | 3,533 | (157.8) | ||
Miscellaneous - net | (2,439) | (17,881) | (86.4) | ||
Total | 132,381 | 194,547 | (32.0) | ||
Interest and Other Charges: | |||||
Interest on long-term debt | 371,793 | 380,321 | (2.2) | ||
Other interest - net | 93,795 | 118,270 | (20.7) | ||
Allowance for borrowed funds used during construction | (15,992) | (20,175) | (20.7) | ||
Preferred dividend requirements of subsidiaries and other | 14,971 | 18,784 | (20.3) | ||
Total | 464,567 | 497,200 | (6.6) | ||
Income Before Income Taxes | 1,594,248 | 1,424,313 | 11.9 | ||
Income Taxes | 544,256 | 483,357 | 12.6 | ||
Consolidated Net Income | $1,049,992 | $940,956 | 11.6 | ||
Earnings Per Average Common Share | |||||
Basic | $5.48 | $4.77 | 14.9 | ||
Diluted | $5.33 | $4.63 | 15.1 | ||
Average Number of Common Shares Outstanding - Basic | 191,444,611 | 197,443,652 | |||
Average Number of Common Shares Outstanding - Diluted | 197,064,629 | 203,362,110 |
Entergy Corporation | |||||||||
Utility Electric Energy Sales & Customers | |||||||||
Three Months Ended Sept. 30 | |||||||||
2008 | 2007 | % | % | ||||||
(Millions of kwh) | |||||||||
Electric Energy Sales: | |||||||||
Residential | 10,671 | 11,128 | (4.1) | (1.5) | |||||
Commercial | 7,997 | 8,111 | (1.4) | (0.1) | |||||
Governmental | 649 | 637 | 1.9 | 2.1 | |||||
Industrial | 10,110 | 10,120 | (0.1) | (0.1) | |||||
Total to Ultimate Customers | 29,427 | 29,996 | (1.9) | (0.5) | |||||
Wholesale | 1,431 | 1,413 | 1.3 | ||||||
Total Sales | 30,858 | 31,409 | (1.8) | ||||||
Nine Months Ended Sept. 30 | |||||||||
2007 | % | % | |||||||
(Millions of kwh) | |||||||||
Electric Energy Sales: | |||||||||
Residential | 26,055 | 25,905 | 0.6 | 1.1 | |||||
Commercial | 20,922 | 20,708 | 1.0 | 1.4 | |||||
Governmental | 1,805 | 1,749 | 3.2 | 3.1 | |||||
Industrial | 29,217 | 29,256 | (0.1) | (0.1) | |||||
Total to Ultimate Customers | 77,999 | 77,618 | 0.5 | 0.7 | |||||
Wholesale | 4,160 | 4,479 | (7.1) | ||||||
Total Sales | 82,159 | 82,097 | 0.1 | ||||||
Sept. 30 | |||||||||
2008 | 2007 | % | |||||||
Electric Customers (End of period): | |||||||||
Residential | 2,308,250 | 2,279,985 | 1.2 | ||||||
Commercial | 328,070 | 323,831 | 1.3 | ||||||
Governmental | 15,344 | 14,919 | 2.8 | ||||||
Industrial | 49,199 | 50,087 | (1.8) | ||||||
Total Ultimate Customers | 2,700,863 | 2,668,822 | 1.2 | ||||||
Wholesale | 29 | 29 | 0.0 | ||||||
Total Customers | 2,700,892 | 2,668,851 | 1.2 |