Entergy 2004 Annual Report Download - page 4

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Entergy Corporation and Subsidiaries 2004
To Our Stakeholders:
n2004, we were honored
for the second consecutive
year to receive the Edison
Electric Institute award in recognition
of the highest total shareholder return
over the last five years for large-cap
electric utilities. From October 1999 to
September 2004, our shareholders
realized a 149 percent returnon their
investment while the S&P Electric
Utilities Index returned 42 percent.
We begin with that simply because
being the leader in generating consistent
shareholder returns is one of our
overarching long-term aspirations. Our
point-of-view driven business model
and the hundreds of decisions made and
actions taken by our employees are all
designed to deliver superior long-term
returns. Winning this particular award,
then, is validationonce again that our
strategies are working, our employees
are performing, our customers are well-
served, and our shareholders are reaping
the rewards.
Financial Results for 2004
Our long-term aspirations guided the
actions we tookin delivering 2004
results and they guide the decisions we
make to deliver long-term growth and
value to our owners.
The year 2004 turned out to be more
challenging for us than expected with
the exceptionally mild weather, the poor
operating results of Entergy-Koch
Trading, and the failure to obtain rate
relief in Texas.
Yet, we also had a number of
successes last year. In November 2004,
we completed the sale of Entergy-Koch
Trading – our trading joint venture with
Koch Energy, Inc. – to Merrill Lynch.
Our point of view on the trading
business has changed dramatically since
we created EKT in 2001. At that time,
we faced impending deregulation and
we were planning a large merchant
generationbuild-out program. With
those commodityprice risks
substantially eliminated, it became clear
that EKT was inherently of more value
to a natural owner like a large financial
entity than it was to us. That point of
view was validated in the sale of EKT
and the subsequent sale of the Gulf
South Pipeline to a subsidiary of Loews
Corporation – transactions that were
completed in fourth quarter 2004 with
cash proceeds expected to exceed
$1 billion, of which the majority of the
proceeds were received in 2004.
In August 2004, we announced a share
repurchase program of up to $1.5 billion
and by year end we had completed
roughly one-third of the buyback
program. In October 2004, the Boardof
Directors raised Entergy’s dividend 20
percent to $2.16 per share on an annual
basis. This follows a 29 percent increase
in 2003. Even with the increase, our
dividend payout ratio of 48 percent is
below our internally imposed cap of 60
percent payout and well under the
industryaverage, providing us the
opportunity to continue to grow the
dividend in the future.
Weareconfident we havesignificant
financial resources to make sound
investments in our utilities and nuclear
business even as we return available cash
to our shareholders through the buyback
and higher dividends.
For 2004, Entergy produced a
one-year total return to shareholders
of 22 percent versus 27 percent for
the S&P Electric Utilities Index –
I