10-QPeriod: Q1 FY2002

ENTERGY CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2002

Filed May 10, 2002For Securities:ETR

Summary

Entergy Corporation reported a net loss applicable to common stock of $78.9 million for the first quarter of 2002, a significant decrease from the $154.2 million profit in the same period last year. This downturn was primarily driven by a substantial $401.4 million pre-tax charge within the Energy Commodity Services segment, related to discontinuing new power plant development and asset impairments due to deteriorating wholesale market economics. Despite this, operating cash flow saw a notable increase, largely due to improved performance in the domestic utility segment and favorable comparisons to the prior year's fuel costs and restoration expenses. The domestic utility segment experienced a decrease in earnings, influenced by lower sales volumes, less favorable weather, and increased operating and maintenance expenses, partially offset by higher unbilled revenue and lower interest expenses. The domestic non-utility nuclear segment showed improved earnings, largely due to the acquisition of Indian Point 2 in September 2001. Investors should monitor the ongoing restructuring within the Entergy Wholesale Operations segment and the continued transition to retail competition in the domestic utility sector, particularly in Texas, where open access implementation has been further delayed.

Key Highlights

  • 1Net loss applicable to common stock of $78.9 million for Q1 2002, compared to a net income of $154.2 million in Q1 2001.
  • 2A significant $401.4 million pre-tax charge was recorded in the Energy Commodity Services segment due to discontinuing new power plant development and asset impairments.
  • 3Net cash flow from operating activities increased to $353.9 million in Q1 2002 from $184.6 million in Q1 2001, primarily driven by the domestic utility segment.
  • 4The domestic utility segment saw a decrease in earnings, impacted by lower sales, weather, and increased operating expenses, though partially offset by higher unbilled revenue and reduced interest expense.
  • 5The domestic non-utility nuclear segment reported increased earnings, mainly due to the operational contribution of the acquired Indian Point 2 plant.
  • 6Retail open access in Entergy Gulf States' Texas territory is now not expected to begin before May 2003, a delay from previous expectations.
  • 7Entergy's effective income tax rate decreased to 26.2% in Q1 2002 from 40.3% in Q1 2001, mainly due to a pre-tax loss reducing the impact of timing differences.

Frequently Asked Questions

The primary reason for the net loss was a significant $401.4 million pre-tax charge recognized in the Energy Commodity Services segment. This charge was related to the company's decision to discontinue additional new power plant development and to account for asset impairments stemming from declining economics in wholesale power markets.

The domestic utility segment experienced a decrease in earnings compared to the prior year. This was attributed to less favorable sales volumes and weather, increased other operation and maintenance expenses, and decreased other income. However, these factors were partially offset by increased unbilled revenue and decreased interest expense.

The implementation of retail open access in Entergy Gulf States' Texas service territory has been further delayed. While previously anticipated around September 15, 2002, management now expects it to commence no earlier than May 2003, due to ongoing regulatory activities.

Entergy's net cash flow provided by operating activities significantly increased to $353.9 million in the first quarter of 2002, up from $184.6 million in the same period of 2001. This improvement was mainly driven by the domestic utility segment, benefiting from a comparison to higher fuel costs and storm restoration expenses in the prior year.