Skip to content
AnalystLens

Entergy Annual Report, Year Ended Dec 31, 1997

Filing Date
Filed March 10, 1998
Period End
December 31, 1997
Security
ETR
In the record · 2016–202610-K1110-Q338-K146

ETR filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 146 current reports (8-K) between 2016 and 2026.

  1. Restructuring8-K · Jan ’17Jan ’17
  2. Leadership change8-K · May ’19May ’19
  3. Leadership change8-K · May ’21May ’21
  4. Material agreement8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 10, 1998. Cited figures are marked; the original filing is the authoritative source.

Entergy Corporation's 1997 annual report (Form 10-K filed March 10, 1998) combines filings for the parent and its six registrant subsidiaries: five domestic retail utilities (Entergy Arkansas, Gulf States, Louisiana, Mississippi, New Orleans), System Energy, and Entergy London, which owns London Electricity.

Consolidated 1997 operating revenues rose to $9.56 billiona from $7.18 billion, but net income fell to $300.9 million from $490.6 million, and earnings applicable to common stock dropped to $247.7 million, or $1.03 per share, from $1.83 in 1996. The decline was driven largely by one-time charges: a $234 million UK windfall profits tax at London Electricity, a $227 million after-tax reserve for regulatory adjustments at Entergy Gulf States tied to Texas River Bend and rate proceedings, and write-offs of radioactive waste facility deferrals. Excluding these items, management says net income would have declined about 8%, reflecting weaker domestic regulated earnings partly offset by growth in competitive businesses.

The $1.07b per share... dividend was held at $1.80 per share. The company's strategic posture shifted sharply toward international and nonregulated growth. The London Electricity acquisition for about $2.1 billion (financed with $1.7 billion of non-recourse debt) was completed in February 1997, and Entergy also acquired CitiPower in Australia and built a foreign power portfolio.

Entergy's ability to invest further in exempt wholesale generators and foreign utilities is now constrained under PUHCA Rule 53 (no further investment without SEC approval or higher retained earnings), a notable limitation on growth. Gulf States' pending Texas rate settlement (a $40 millionc annual base rate cut, $381 million reserve) and the PUCT's January 1998 vote to disallow $1.4 billion of abeyed River Bend costs are the principal regulatory overhangs. Retail competition, the Cajun settlement (which yielded a $146 million gain), and nuclear costs (including ANO 2 steam generator replacement, estimated at about $150 million) also shape the outlook.

For investors, the filing presents a company in transition: a stable core utility base facing price pressure and rate cuts, funded by a higher-risk, debt-financed international portfolio. Market value of non-affiliate common equity was $7.1 billiond as of February 27, 1998, and the stock traded in a $22 to $30 range during 1997.

02—Key points

Key Highlights

  1. Consolidated operating revenues grew 33% to $9.56 billion in 1997, driven by the London Electricity acquisition (about $1.8 billion of revenue for eleven months) and a $427 million increase at EPMC.
  2. Net income fell to $300.9 million ($1.03 per share) from $490.6 million ($1.83 per share), largely due to a $234 million UK windfall profits tax and a $227 million after-tax regulatory reserve at Entergy Gulf States.
  3. Entergy Gulf States recorded a $381 million reserve tied to a proposed Texas rate settlement that includes a $40 million annual base rate reduction and a four-year rate freeze.
  4. The PUCT voted in January 1998 to disallow recovery of $1.4 billion of company-wide abeyed River Bend plant costs (about $624 million Texas share), a key regulatory risk still pending a formal order.
  5. Entergy has no further capacity to invest in exempt wholesale generators or foreign utility companies without SEC approval under PUHCA Rule 53, constraining its international growth strategy.
  6. Cash flow from operations rose to $1.72 billion, supported by rate phase-in collections, while the Cajun settlement added $146 million to Gulf States' net income.
  7. Common dividends were maintained at $1.80 per share, with $438 million paid in 1997; total long-term debt and preferred obligations increased significantly to fund acquisitions.

03—Questions

Frequently Asked Questions

  1. Why did Entergy's earnings decline so sharply in 1997 despite higher revenues?

    Revenue growth came mainly from the consolidated London Electricity acquisition, but net income was cut by one-time items: a $234 million windfall profits tax in the UK (not tax-deductible), a $227 million after-tax reserve at Entergy Gulf States for regulatory adjustments, and write-offs of radioactive waste facility deferrals at several subsidiaries. Management estimates that excluding these items, net income would have fallen about 8% due to lower earnings from domestic regulated operations.

  2. What are the biggest regulatory risks facing Entergy Gulf States?

    The main risks are the Texas River Bend matter, where the PUCT voted to disallow $1.4 billion of abeyed costs (Texas share about $624 million), and the pending Texas rate proceedings. A proposed settlement would cut base rates by $40 million annually with retroactive refunds, but final approval is not yet assured. Gulf States also faces the Louisiana LPSC reviews and the unresolved NISCO cost recovery appeal, which has $182 million expensed to date.

  3. How is Entergy financing its international expansion, and what are the risks?

    The London Electricity purchase ($2.1 billion) was financed mainly with $1.7 billion of debt that is non-recourse to Entergy Corporation, plus $392 million of equity. Other projects, such as the Hull, England power plant (about $1.07 billion non-recourse facility), are similarly project-financed. Risks include currency exchange movements, UK price-control reductions (3% annual cuts plus a supply price cut of 11.8% in April 1998), competition in the supply business, and PUHCA limits on further foreign investment.

  4. Is Entergy's dividend secure?

    The dividend was held at $1.80 per share in 1997, and $438 million of common dividends were paid. Entergy's principal source of parent-level cash is dividends from subsidiaries ($550 million in 1997), and some subsidiaries face restrictions, such as Entergy Arkansas (about $291 million of restricted retained earnings) and PUHCA limits on upstreaming. Earnings per share of $1.03 did not cover the $1.80 dividend in 1997, so payout coverage depends on a return to stronger earnings.

04—Continue

← View all 10-K filings