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Entergy Annual Report, Year Ended Dec 31, 1999

Filing Date
Filed March 15, 2000
Period End
December 31, 1999
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 15, 2000. Cited figures are marked; the original filing is the authoritative source.

Entergy Corporation's 10-K for fiscal 1999 (filed March 15, 2000) describes a holding company whose primary earnings engine is its regulated domestic utility operations, which contributed 73%a of operating revenue and 93% of net income in 1999.

Consolidated 1999 results were weaker than 1998: operating revenues fell to $8.77 billionb from $11.49 billion, largely because London Electricity and CitiPower were sold in December 1998 and power marketing volumes declined. Net income dropped to $595 million from $786 million, and earnings applicable to common stock were $2.25 per share versus $3.00 in 1998. Lower 1999 results reflected the absence of 1998 sale gains, while the domestic utilities grew net income about 5%.

The filing's most important forward-looking items are a $9.8 billionc capital investment plan for 2000-2004, heavy spending on the Saltend (UK, 1,200 MW) and Damhead Creek (UK, 800 MW) merchant plants, a planned option on about $2.0 billion of GE gas turbines, and an offer to acquire NYPA's FitzPatrick and Indian Point 3 plants. Regulatory transition is a central risk: Arkansas and Texas passed retail open access laws effective January 1, 2002, creating possible stranded-cost exposure of several billion dollars and possible loss of SFAS 71 accounting. Litigation is also material, including a pending LPSC proceeding with $544 million of claimed fuel-cost damages in Louisiana, a $1.1 billion Indian arbitration claim, and an ice storm class action.

For investors, the key tensions are between a solid regulated utility base and a growing, capital-intensive, more speculative merchant generation and nuclear strategy, combined with significant regulatory and litigation uncertainty. The company also repurchased stock aggressively in 1999 and maintained a dividend of $1.20d per share, which was reduced from $1.80 in 1997.

02—Key points

Key Highlights

  1. Consolidated operating revenues fell 24% to $8.77 billion in 1999 from $11.49 billion, mainly due to the 1998 sales of Entergy London and CitiPower and lower power trading volume.
  2. Net income declined to $595.0 million ($2.25 per share) from $785.6 million ($3.00 per share), with 1998 boosted by roughly $357 million of after-tax gains on the London and CitiPower sales.
  3. Domestic utility companies and System Energy generated 93% of 1999 net income and 73% of operating revenue, anchoring the company's earnings base.
  4. A $9.8 billion capital investment plan for 2000-2004 includes $4.2 billion for domestic utilities, $3.9 billion for global power development, and $1.7 billion for nuclear operations.
  5. Arkansas and Texas enacted retail open access laws effective January 1, 2002; Entergy may have to discontinue SFAS 71 for generation, potentially creating material write-offs, though stranded-cost recovery is also allowed.
  6. Major litigation includes a Louisiana antitrust/fuel-cost suit with $544 million of claimed damages plus interest, a $1.1 billion Hindusthan arbitration claim in India, and an ice storm class action in Texas.
  7. Entergy repurchased about 8.5 million common shares for roughly $245 million in 1999 under a plan authorizing up to $1 billion through December 2001.

03—Questions

Frequently Asked Questions

  1. Why did Entergy's reported earnings fall in 1999?

    The decline was mainly due to the absence of 1998 gains on the sales of Entergy London and CitiPower, which were sold in December 1998, and to lower power marketing and trading results. Domestic utility net income actually rose about 5%, so the core utility business improved while the 1998 comparison was inflated by one-time gains.

  2. How exposed is Entergy to electricity restructuring?

    Exposure is significant. Arkansas and Texas have passed open access laws, and the company estimates about $1.8 billion at Entergy Arkansas, $3.3 billion at Entergy Gulf States, $2.5 billion at Entergy Louisiana, and $0.3 billion at Entergy Mississippi of potentially strandable costs reflected on the balance sheet, plus additional off-balance-sheet obligations. Louisiana, Mississippi, and New Orleans have no transition legislation yet, so recovery there is uncertain.

  3. What is the growth strategy outside the regulated utilities?

    Entergy is building merchant generation through its global power development business, including the UK Saltend and Damhead Creek plants (about $824 million and $582 million, respectively), and a planned Fairfield, Texas merchant plant. Its non-utility nuclear unit bought Pilgrim in July 1999 and has offered to acquire NYPA's FitzPatrick and Indian Point 3 plants. These projects add growth potential but also construction, delay, and financing risk; Saltend's completion was already delayed past January 2000.

  4. What are the main financing needs and dividend considerations?

    Entergy plans to spend $9.8 billion over 2000-2004 and says significant borrowings may be needed, contingent on capital market access. Common dividends were $1.20 per share in 1999, down from $1.50 in 1998 and $1.80 in 1997, and the Board sets dividends based on earnings and financial strength. The company also used about $291 million in 1999 to pay common dividends and $245 million to repurchase stock.

04—Continue

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