8-KEarnings & ResultsRegulation FD

ENTERGY CORP /DE/ 8-K Report, Financial Results (Oct 16, 2015)

Filed October 16, 2015For Securities:ETR

Summary

Entergy Corporation announced in an 8-K filing on October 16, 2015, that it will record significant non-cash asset impairments totaling approximately $1.6 billion pre-tax ($1.1 billion after-tax) in its third-quarter 2015 results. These impairments are primarily related to the Pilgrim Nuclear Power Station and the James A. FitzPatrick Nuclear Power Plant. The company classifies these charges as special items, meaning they will be excluded from operational results, which is a crucial distinction for investors analyzing underlying business performance. The impairments stem from "triggering events" that necessitated an evaluation of the long-lived assets for impairment under U.S. GAAP. The filing also provides specific per-share impacts, indicating a combined after-tax earnings per share reduction of $5.93. While these are substantial non-cash charges, the company expects them to reduce future depreciation and amortization expenses for these plants, potentially leading to lower operating costs going forward. The announcement also includes significant strategic updates regarding these nuclear assets, with Pilgrim slated for closure by June 1, 2019, and ongoing discussions with New York State about the future of FitzPatrick.

Key Highlights

  • 1Entergy will report non-cash asset impairments of approximately $1.6 billion pre-tax and $1.1 billion after-tax in Q3 2015.
  • 2The impairments are related to the Pilgrim Nuclear Power Station and the James A. FitzPatrick Nuclear Power Plant.
  • 3These impairment charges will be classified as special items and excluded from operational results.
  • 4The total after-tax earnings per share impact is estimated at $(5.93).
  • 5Entergy plans to close the Pilgrim plant by June 1, 2019.
  • 6The company is in discussions with the State of New York regarding the future of the FitzPatrick plant, with a decision expected around the end of October 2015.
  • 7Future depreciation and amortization expenses for these plants are expected to be lower post-impairment.

Frequently Asked Questions

Entergy expects to record non-cash asset impairments totaling approximately $1.6 billion on a pre-tax basis and $1.1 billion on an after-tax basis in its third quarter 2015 results. These impairments will reduce after-tax earnings per share by an estimated $5.93 in total.

No, the company states that these impairment charges will be classified as a special item and therefore excluded from operational results. This means that investors analyzing underlying business performance should look beyond these one-time charges.

Entergy has announced plans to close the Pilgrim Nuclear Power Station by June 1, 2019. For the James A. FitzPatrick Nuclear Power Plant, the company is in discussions with the State of New York regarding its future and plans to make a decision around the end of October 2015, potentially including whether to proceed with its next refueling outage.

Yes, on a forward-looking basis, these non-cash impairments will reduce the asset balances of the plants. This is expected to lower future depreciation and amortization expenses, as well as potentially other associated costs such as fuel and refueling outage expenses that would have been capitalized.