10-KPeriod: FY2008

ENTERGY CORP /DE/ Annual Report, Year Ended Dec 31, 2008

Filed March 2, 2009For Securities:ETR

Summary

Entergy Corporation's 2008 10-K filing reveals a company with two primary segments: Utility and Non-Utility Nuclear. The Utility segment, serving a four-state region including Arkansas, Mississippi, Texas, and Louisiana, experienced revenue impacts from hurricanes Gustav and Ike, leading to significant restoration costs estimated between $1.295 billion and $1.360 billion. Despite these challenges, the company continued its plan to separate the Non-Utility Nuclear business through a tax-free spin-off, creating a new entity, Enexus Energy Corporation, which would also form a joint venture, EquaGen LLC, with Entergy. This separation process faced regulatory hurdles, notably with the Nuclear Regulatory Commission (NRC) and the New York Public Service Commission. The company also reported strong performance in its Non-Utility Nuclear segment, driven by higher pricing and the acquisition of the Palisades plant, though it noted potential future pricing uncertainty due to declining natural gas prices. Financially, Entergy saw an increase in consolidated net income to $1.22 billion in 2008, compared to $1.13 billion in 2007, driven largely by the strong performance of the Non-Utility Nuclear segment. The company's liquidity remained sufficient, with $1.9 billion in cash and cash equivalents on hand as of December 31, 2008. Entergy also managed its capital structure, with the debt-to-capital ratio increasing slightly to 59.7%, in line with its financial aspirations. The report highlights the company's ongoing capital expenditure plans, focusing on maintenance and growth projects within its Utility segment, and its commitment to shareholder returns through dividends and share repurchases.

Financial Highlights

48 data points
Beta

Net Income

$1.24B

EPS (Diluted)

$3.10

Total Assets

$36.62B

Cash & Equivalents

$1.92B

Free Cash Flow

$3.32B

Financial Statements
Beta
Operating Expenses$10.81B
Operating Income$2.28B
Interest Expense$608.92M
Net Income$1.24B
EPS (Basic)$3.19
EPS (Diluted)$3.10
Shares Outstanding (Basic)381.85M
Shares Outstanding (Diluted)402.02M

Key Highlights

  • 1Entergy is pursuing the separation of its Non-Utility Nuclear business through a tax-free spin-off into a new entity, Enexus Energy Corporation, which will also form a joint venture, EquaGen LLC, with Entergy.
  • 2The company incurred significant restoration costs estimated between $1.295 billion and $1.360 billion due to Hurricanes Gustav and Ike impacting its service territories in Louisiana and Texas.
  • 3Consolidated net income increased to $1.22 billion in 2008, primarily driven by the strong performance of the Non-Utility Nuclear segment.
  • 4Liquidity remained strong, with $1.9 billion in cash and cash equivalents as of December 31, 2008.
  • 5The Non-Utility Nuclear segment reported increased net revenue and strong capacity factors, although future pricing for power sales remains uncertain due to market trends.
  • 6Entergy's debt-to-capital ratio increased to 59.7% as of December 31, 2008, which management indicated is in line with its financial aspirations.
  • 7Capital expenditures for 2009 are planned at $1.999 billion, focusing on maintenance and capital commitments within the Utility segment.

Frequently Asked Questions

Entergy's Board of Directors approved a plan to pursue a separation of the Non-Utility Nuclear business through a tax-free spin-off to Entergy shareholders. This would result in the creation of a new, separate, publicly-traded company, Enexus Energy Corporation. Entergy and Enexus are also expected to enter into a nuclear services business joint venture, EquaGen LLC. The separation process is complex and involves securing various regulatory approvals, including from the NRC, and completing necessary financings. Some regulatory approvals are pending, and the completion of the spin-off is subject to several conditions, including final Board approval.

Hurricanes Gustav and Ike caused catastrophic damage to Entergy's service territories in Louisiana, Texas, Arkansas, and Mississippi in September 2008. The total estimated restoration costs for repairing or replacing damaged electric facilities range from $1.295 billion to $1.360 billion. Entergy is exploring various cost recovery avenues, including storm reserves, federal and local mechanisms, securitization, and insurance, but acknowledges the risk and uncertainty associated with the timing and extent of recovery.

Entergy Corporation reported consolidated net income of $1.22 billion in 2008, an increase from $1.13 billion in 2007. This growth was primarily driven by the strong performance of the Non-Utility Nuclear segment, which saw increased net revenue due to higher pricing and the acquisition of the Palisades plant. The Utility segment's net revenue saw a slight decrease, partly due to lower electricity usage impacted by the hurricanes and a weaker economy.

Entergy maintained a sufficient liquidity position as of December 31, 2008, with $1.9 billion in cash and cash equivalents. The company also had undrawn revolving credit facility capacity available, subject to debt covenants. Long-term debt maturities in 2009 were manageable, and Entergy intended to manage its liquidity through operating cash flow and access to capital markets.