Entergy to take first-quarter charge for abandoning greenfield power plant development


NEW ORLEANS, April 12, 2002 — In accordance with Regulation FD, Entergy Corp. Thursday reported it expects to report solid first quarter 2002 financial results with operational earnings of at least $0.76 per share, including the impact of weather.

The current published First Call consensus estimate for Entergy’s first quarter earnings is $0.69 per share. Entergy reaffirmed operational earnings guidance for the full year 2002 to be in the range of $3.40 to $3.60 per share.

On an as reported basis, Entergy’s first quarter earnings will be substantially lower due to the inclusion of some or all of a predominantly non-cash, special charge ranging from $(1.15) to $(1.35) per share. A portion of the charge may be recorded in a subsequent period, as certain negotiations currently underway and proper accounting treatment in compliance with applicable rules are finalized.

Entergy will record this special charge as a result of its decision to discontinue development of additional greenfield power plants in both the United States and Europe where overbuilt power markets are expected to continue to reflect depressed power prices. The company expects this decision to improve its already strong financial condition, to substantially reduce capital expenditures that would have been made in already oversupplied markets, and to enhance its financial performance going forward by redeploying capital into more financially attractive investments.

Entergy’s previous record for first quarter operational earnings was $0.75 per share, set in the first quarter of 2001. Key drivers that are expected to cause current quarter earnings to differ from those reported in 2001 include the following:

* Utility results are expected to be lower in the first quarter 2002 compared to 2001 as a result of lower industrial sales due to a comparatively slower economy, higher operation and maintenance expense and warmer weather compared to the previous period. The cessation of goodwill amortization partially offset these negative factors for the quarter. (For comparative purposes, first quarter 2001 operational results at the Utility were $0.52, including $0.05 due to colder-than-normal weather.)

* Entergy Nuclear results are expected to be higher in the current quarter compared to first quarter 2001 due to the acquisition of Indian Point 2 in September 2001 and strong operational performance and high capacity factors achieved across the non-utility nuclear fleet. (Entergy Nuclear recorded $0.13 in operational earnings per share in first quarter 2001.)

* Energy Commodity Services results are expected to be higher compared to first quarter of 2001. This business unit benefited from a full quarter’s contribution from Entergy-Koch versus only two months in first quarter 2001, as well as strong results in trading. Results were negatively impacted by continued weak power prices in the United Kingdom and by the absence in 2002 of liquidated damages recorded in first quarter 2001 in connection with construction delays on the Damhead Creek plant in the UK. (ECS had $0.09 in operational earnings per share in first quarter 2001.)

* Results at the Parent are expected to be flat to lower compared to first quarter 2001. (Parent had $0.01 in operational earnings per share in first quarter 2001.)

The special charge Entergy expects to record will reflect the impairment of assets consistent with Entergy’s market point of view, the disposition of certain commitments, and the restructuring of Entergy Wholesale Operations. The most significant components of the charge are related to the Damhead Creek plant and turbines previously contracted for with GE Power Systems.

Entergy Wholesale Operations will emerge from the restructuring as an asset operator of approximately 2,500 megawatts of non-nuclear generation which is currently operational or in construction. Entergy expects to continue to pursue the acquisition of existing or partially complete generation assets that are priced consistent with its market point of view, with a particular emphasis on assets that provide trading value to Entergy-Koch, L.P.

Entergy is a major global energy company with power production, distribution operations and related diversified services. Entergy owns, manages, or invests in power plants generating more than 30,000 megawatts of electricity domestically and internationally, and delivers electricity to about 2.6 million customers in portions of Arkansas, Louisiana, Mississippi and Texas. Through Entergy-Koch, L.P., it is also a provider of wholesale energy marketing and trading services.

Entergy’s online address is http://www.entergy.com Additional investor information can be accessed online at http://investor.entergy.com/investor/index_main.shtm.


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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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