Entergy 2002 Annual Report Download - page 11

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ENTERGY CORPORATION AND SUBSIDIARIES 2002 9
mid challenging conditions in our
economy and industry, Entergy has
delivered superior financial results by focusing
on our core competencies, providing
outstanding customer service, and maintaining
sound financial integrity.
Outstanding performance
and recognition
Entergy has established a track record of results.
In 2002, Entergy generated outstanding returns
to shareholders, leading the S&P Electric
Utilities Index with total shareholder return
of 20 percent. This compares with a 15 percent
loss for the index. Operational earnings for
2002 were $3.81 per share, an increase of
18 percent over 2001. Over the past four years,
operational earnings have grown at an average
annual rate of nearly 15 percent.
As reported earnings in 2002 were $2.64 per
share, down from $3.23 per share in 2001. As
reported earnings have declined at an average
annual rate of 3 percent between 1998 and
2002 as a result of special items, which are not
included in operational earnings. As reported
earnings for 2002 reflect charges to earnings
related to our wholesale power development
business, and as reported earnings in 1998
include gains on the sales of London Electricity
and CitiPower.
In June, Entergy Corporation received our
industry’s highest honor – the 2002 Edison
Award – from the Edison Electric Institute.
The award recognizes our competitive nuclear
business and safer, more efficient nuclear
operations at all our plants.
In November, Entergy was recognized as
the “Power Company of the Year” at the
Platts/BusinessWeek Global Energy Awards.
The international panel of judges recognized
Entergy for our nuclear growth strategy and
our commitment to the environment.
Standing up for our stakeholders
Entergy is focused on meeting our commitments
and responsibilities to all our stakeholders. We
are guided by a consistent strategy, a clear point
of view, and sound principles.
Management discipline – Entergy’s
management team has consistently followed a
conservative financial strategy.
Since we adopted our refocused strategy in
1998, we have maintained net debt at or below
50 percent of capitalization. Over 80 percent of
Entergy’s debt is in the regulated utility business.
We have very little off-balance-sheet debt.
Most of our revenues come from stable,
regulated sources – our utility business, the
regulated pipeline business at Entergy-Koch,
and power purchase agreements with regulated
utilities in our nuclear business.
Entergy has limited exposure to trading losses.
We’ve provided no parent guarantee to Entergy-
Koch. And Entergy-Koch is financially sound,
with the highest credit rating of any energy
trading company without such a guarantee.
Corporate governance and
transparency – Entergy’s corporate
governance structure is based on integrity and
accountability. Entergy has an independent,
involved Board of Directors. The CEO is the
only board member from inside the company,
and he does not serve as Chairman.
Entergy has been recognized for strong
financial disclosure. We have been working to
enhance the information we provide to investors,
an effort we began long before recent events
brought attention to this issue. We are also
continually improving Entergy’s already-strong
internal controls. And Entergy’s Audit Committee
regularly evaluates our independent auditor.
One practice we recently adopted is the
expensing of stock options, effective January 1,
2003. This change is not expected to have a
material effect on Entergy’s results.
AA
Entergy stock has
consistently outperformed
the market in delivering
returns to shareholders
since we adopted a
refocused strategy in 1998.
An investment in Entergy
stock in mid-1998
produced a total
shareholder return – share
price appreciation plus
dividends – of 130 percent
as of December 31, 2002,
compared with 13 percent
for the S&P Electric Utilities
Index and negative returns
for the S&P 500.
RECOGNITION
Protecting
Shareholders’ Interests
Entergy’s risk management
efforts were honored by
The Institute of Internal
Auditors with the
Commitment to Quality
Improvement Award for
the first half of 2002.
Entergy also won the
award in 1999.
Entergy Total Return
to Shareholders vs.
S&P Electric Utilities
and S&P 500
Mid-1998 through 2002
ETR S&P S&P
Electric 500
Utilities
130%
(16%)
13%
ENTERGY CORPORATION: PERFORMANCE AND PRINCIPLES